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Why Portola Pharmaceuticals Inc Stock Surged Higher Today

Acceptance of an application for a speedy review is an early gift for the beleaguered biotech.

What happened

Shares of clinical stage anticoagulant specialist Portola Pharmaceuticals Inc(NASDAQ:PTLA) rose 33.5% at the end of Friday's session. Announcements that key regulatory agencies have officially accepted new drug applications for betrixaban is the cause of the early holiday celebration.

So what

Earlier this year, the market thumped this stock when it presented data that showed that a group of frail patients receiving betrixaban failed to exhibit a significant benefit over Sanofi's injectable anticoagulant Lovenox. More recently, the company announced that a set of acutely ill patients in the large phase 3 trial indeed benefitted from a significant reduction to their risk of stroke with once-daily oral betrixaban over the far less convenient Lovenox injections.

Unfortunately for Portola's stock price, the second look at the data did little to lift the dark cloud of doubt that the top-line figures cast over the program. In late October, the company announced it submitted an application to the U.S. Food and Drug Administration (FDA) for extended prevention of lethal blood clots for acutely ill patients, but it took an official acceptance notice from the FDA and European Medicines Agency, along with a promise of a priority review, to persuade the market it had a real shot at an approval to treat this group.

Now what

Betrixaban is a factor Xa inhibitor of the same class as blockbuster drugs Eliquis from partners Pfizer(NYSE:PFE) and Bristol-Myers Squibb(NYSE:BMY), and Xarelto from Johnson & Johnson. Xarelto earned its first FDA approval in 2011, and finished the third quarter on an annualized run rate of about $2.11 billion in sales. Eliquis hit pharmacy shelves the following year, and Bristol boasted a 90% pop in third-quarter sales that suggest a $3.54-billion run rate.

If approved, Portola's betrixaban launch could be a difficult one, but earning just a small slice of what is clearly a huge market would send the stock climbing much higher. Betrixaban alone justifies Portola's recent market cap of just $1.41 billion following Friday's surge, but it might be the company's second most valuable asset.

Portola is the only company with an antidote that quickly reverses the activity of factor Xa inhibitors. This summer, the FDA sent AndexXa's application back for more data concerning its use with Lovenox and its manufacturing process -- a common theme for the agency this year. Pfizer and Bristol-Myers Squibb are clamoring for such an antidote, and the big pharmas offered Portola a $50-million vote of confidence earlier this week. The Eliquis partners are willing to let the clinical-stage company borrow the funds to further its development and let Portola repay the loan with its potential sales.

If AndexXa earns approval, sales of the only factor Xa antidote could surge, given its pent-up demand. That makes this one stock you'll want to keep a close eye on during the new year.